Thursday, April 10, 2008

The First Solar Bubble (FSLR)

Let me tell you the story of a Wall Street goldmine, its called First Solar, a photo voltaic producer that went public on the Nasdaq November 16th 2007 with the ticker FSLR. Up until now it has been a stunning generation of wealth, almost $20 Billion created on paper since that $25 close on the first day of trading. Here's what the first four months of trading looked like:

As you can see above (by clicking on the image), the first four months were filled with all the types of firsts the initial shareholders would have hoped for. After a 25% gain on the first day of trading it consolidated near $27.50 for a few months before it's first big breakout in Jan 2007. A few weeks later it's first of many big gaps was created after releasing it's first earnings report. The numbers were obviously fantastic and that gap remains unfilled, maybe justly so.

First Solar produces photovoltaics (solar cells) out of thin films of Cadmium Telluride (CdTe) which is just a semiconductor like Silicon. They essentially just sputter the stuff (CdTe and dopants) onto glass that continuously (I assume) runs through their machines. This makes their solar cells very cheap compared with other technologies because its a high throughput process and the cells are made from cheap materials (thusfar). One unfortunate drawback to the cheapness of their process is very low energy conversion efficiency. Because of their choice of materials and processing method First Solar's cells convert only 10.5% of sunlight into electricity versus ~20% for most Silicon based solar cells (of course this varies with the time of day and location). That means the FSLR solar panel needs to be twice as big for the same power output as a typical cell on the market. Buildings obviously have a limited amount of roof top space, so the low efficiency of their cells could become a problem for them in the future. What Wall Street has focused on is the cost efficiency and it turns out that "First Solar is contractually bound to reduce price per watt by 6.5% per year and plans to be competitive on an unsubsidized basis with retail electricity by 2010." So they might actually be able to compete with unsubsidized energy in two more years, now thats cool! In the end their products can be characterized as low efficiency but cheap.

They sell these solar cells mostly in Germany to industrial companies that get big subsides for using solar energy. Since the subsides are based on power usage only, companies can "profit" the most by going with the cheapest per watt solar cells. And that is currently FSLR but a new technology by Nanosolar is expected to beat them by a mile on that figure of merit. I don't want to go into details here, but let me say that there is serious competition in this space. Nanosolar says they can make cells for "less than $.99 per watt" compared with First Solar's $1.40 per watt, just for example. Nanosolar uses CIGS as their semiconductor which should be more efficient based on the band gap. In fact, many researchers see CIGS as the the best candidate for thin film solar. It still sounds like a decent story, so what has the stock done since those first four months?


The stock has exploded in an orgy of profits for anyone who has owned the stock. After being valued at $1.5B initially the company is now worth over $22B and they expect sales of less than $1B in 2008! Just for fun, another "energy" company called Chevron (CVX) is worth $186B and had revenues of $201B in the last year. So FSLR is worth 1/10th of CVX, now that is incredible.

Here's the deal, FSLR is going to have a very hard time lowering the cost of their cells because they are based on one of the rarest metals on the planet: Tellurium. "With an abundance in the Earth's crust even lower than platinum, tellurium is, apart from the precious metals, the rarest stable solid element in the earth's crust. Its abundance in the Earth's crust is 1 to 5 ppb, compared with 5 to 37 ppb for platinum. By comparison, even the rarest of the lanthanides have crustal abundances of 500 ppb." Recently a number of new applications of the mildly toxic metal have been found and its price has been sky rocketing in this commodity boom we are in:


I should note to be fair, "the extreme rarity of tellurium in the Earth's crust is not a reflection of its cosmic abundance" (from wikipedia). Theres more on the Tellurium situation for FSLR here.

Anyways, the semiconductor they use, CdTe is only half Tellurium. The other half comes from a less rare but extremely toxic (carcinogic) material: Cadmium. I work with Cadmium precursors and let me tell you this stuff is bad, bad, bad and we take some pretty extreme safety precautions. "Cadmium is an occupational hazard associated with industrial processes such as metal plating and the production of nickel-cadmium batteries, pigments, plastics, and other synthetics. The primary route of exposure in industrial settings is inhalation. Inhalation of cadmium-containing fumes can result initially in metal fume fever but may progress to chemical pneumonitis, pulmonary edema, and death." (from wikipedia) Yikes! And it gets worse, "Cadmium and several cadmium-containing compounds are known carcinogens and can induce many types of cancer." Yeah, so they picked the most rare material an the most hazardous material and stuck them together!

So of course there are going to be environmental problems with the stuff. "Cadmium is also a potential environmental hazard. Human exposures to environmental cadmium are primarily the result of the burning of fossil fuels and municipal wastes.[4] However, there have been notable instances of toxicity as the result of long-term exposure to cadmium in contaminated food and water. In the decades following World War II, Japanese mining operations contaminated the Jinzu River with cadmium and traces of other toxic metals. As a consequence, cadmium accumulated in the rice crops growing along the riverbanks downstream of the mines. The local agricultural communities consuming the contaminated rice developed Itai-itai disease and renal abnormalities, including proteinuria and glucosuria.[5] Cadmium is one of six substances banned by the European Union's Restriction on Hazardous Substances (RoHS) directive, which bans carcinogens in computers." (from wikipedia) Did you see that last part, its banned in the EU. How FSLR has gotten around that ban is beyond me, but it sure seems like this could be a problem for them in Germany. There is also the question of whether this technology does more harm than good since the material in these devices are so bad. Its a given that at least some solar panels will crack and break, releasing very nasty materials into the environment.

Theres another issue that I'm looking more carefully into, Tellurium containing compounds are very prone to oxidation. When exposed to air for long periods of time they will degrade significantly. This likely means that FSLR must encase their panels in a very thick insulating material (which I hope they do because of the Cadmium anyways). This insulation adds cost, non-power generating light absorption and is likely to contain some leaks. My guess is that over time the CdTe panels loose efficiency faster than other materials but I need to research this further.

Let me just summarize this here. First Solar has some very series problems ahead between heavy competition, sky rocketing materials costs and regulation of their extremely hazardous products. Meanwhile, Wall Street has tricked the world into thinking that this stock is worth more than twenty times this year's revenues. The stock has become a massive bubble by the speculation of ignorant (and naiive?) investors, even Cramer loves this stock! I expect this will be one of those greatest shorts of all time and maybe they'll even go out of business in a few years. I'm very bullish on solar energy and I expect most stocks in the sector to do VERY well, but FSLR is inherently flawed based on their material choices. I have marked support levels (and possible targets on the way down) on the weekly chart above in purple, and I would not be surprised at all if that gap at $35 gets filled eventually. First Solar might just be the first solar bubble to pop.

Disclosure: I own FSLR puts

36 comments:

Anonymous said...

The best use of your report would be recycling as toilet paper.

As you should know by my name, I have experience in the Short market... Anyone shorting FSLR is a moron. Particularly when you base your decision on the wrong facts, for example:

#1 you state FSLR cost/watt is $1.40 WRONG their cost is $1.12 to $1.00/watt later this year. Try actually reading the FSLR Q's and K's, its all in there.

2. Nanosolar produces at $.60/watt. I'm a big fan of Nanosolar, but they need to actually produce commercial volume rather than say they can. Since reporting Dec 20 2007 they had begun production, we haven't seen any evidence they're producing at commercial scale, or at $.60/watt. Expect a minimum of several years for them to work out bugs allowing them to produce at any significant volume.

3. arguments re: material shortages & toxicity are just plain ignorant. There's tons of material available for processing [call mines as I have]; identical toxic materials are used in millions of laptop and hand tool batteries today. Using toxic materials in 25-35yr PV panels that can be recycled is no big deal.

4. oxidization issues. duh. Another ridiculous argument. Every pv panel be it CdTe, CIGS, or crystalline MUST be completely airtight to avoid oxidization. And they all are and have been for 20+ yrs.

5. Concerns re: 10% efficiency. Once again completely ridiculous. You need approx 1000 sq ft of install space using 20% efficient PV or 2000 sq ft of space using 10% PV to run all of the power needs of a house. If you're building a commercial power plant primary concern is cost/watt. If you're installing a home based system, the primary concern is cost/watt. Crystalline PV that get 20% efficiency costs $2.40+ to produce.

The mighty $ wins every time. Ask someone if they would rather spend $35k for pv panels or $15k to get 10,000 watts. FSLR is the only company where you could pay $15k.

Good luck with your short position, and, I suggest you do some research yourself next time, rather than copying this crap report that was put out months ago by other shorts who subsequently were proven idiots and got run over.

Steve Pluvia

Anonymous said...

you should study up on how first solar makes solar panels. They DO NOT use metal as a substrate,it is a 2 by 4 ft glass sheet. They do not spray the material on the glass. It is sputtered on in a method similar to the production of semiconductors. Look up sputtering. The whole process is similar to the way semiconductors are produced, only in a much larger scale. Very energy intensive with the use of some very toxic gases. I am not an expert on the process, but I interviewed for a position there about 6 years ago when we found out our semiconducter mfg plant was being moved to FL. The process is not simple and it took them a few years to get the bugs out of it. I have friends employed there. the plant is in perrysburg, ohio and the place I was employed at for 23 years was in findlay, ohio. It was a RCA plant that changed hands and names a few times.

pythagoruz said...

Thanks for the comments, I'll respond in detail later when I have some time.

pythagoruz said...

"Steve Pluvia",

Your tone was somewhat disrespectful but in the end I thought it was funny and you make some decent points so I allowed the comment. I must have really irked you with that post because you sure put some time into your babble, I will respond on a point by point basis...

"The best use of your report would be recycling as toilet paper. "

Ah the internet, gotta love it. No paper involved.

"As you should know by my name"

Ah yes, I've heard all about you. Not.

"I have experience in the Short market"

Now I'm starting to think that you are a joke. Seriously, are you for real?

"when you base your decision on the wrong facts"

Thats an oxymoron since there is no such thing as a wrong fact. A wrong fact would be fiction, no?

Ok, on to your arguments.

On #1, I provided links to support my numbers you did not.

On #2, I also provided a link on my Nanosolar quote but ok, so they can probably do better especially when they ramp up production. That supports my argument even more. Nanosolar is going to beat them on the price per watt by a mile (with yours or my numbers) and theres no reason to think they won't be able to ramp up production.

On #3, material shortage is a real issue and it shows up in the price of Tellurium. I quoted a source which said Tellurium is even more rare than Platinum, one of the rarest metals on the earth. Platinum has some great catalytic properties but not many people study the material for applications because it is so rare. Even if you made some great device out of it there just isn't enough of it on the planet to do anything meaningful. On the toxicity, Cadmium is banned in the EU and for good reason. Silicon is not banned, and is much safer. After all, beach sand contains silicon. If beach sand contained cadmium the ocean would be a toxic swamp. To say these things don't matter is ridiculous.

On #4, well I told you I am looking into it but you are correct that other photovoltaics and electronic devices do need to be airtight (and already are). All I'm saying is that Tellurium containing compounds tend to oxidize much faster than other electronic materials. This may or may not affect the lifetime of the modules. This was a bit of thinking out loud, I'm not sure if this is a legitimate issue yet.

On #5, you are correct that right now the most important figure of merit is cost per watt but the fact that their efficiency is so much lower is a problem. In many applications space limits the number of modules that can be installed. Higher efficiency cells would be preferable for obvious reasons in those cases. In addition, there are more modules to transport, maintain and break when you go with a lower efficiency solution (but the same power output). These things raise overhead and I'd rather bet on a 20% or 30% conversion efficiency technology than a 10%. Conversion efficiency will be somewhat fixed by materials choices where as cost can come down with engineering and industrial scales.

"The mighty $ wins every time. Ask someone if they would rather spend $35k for pv panels or $15k to get 10,000 watts. FSLR is the only company where you could pay $15k."

The question is mute if they can only fit 5,000 watts worth of FSLR panels on their roof and they need 10,000 Watts.

Well, as upset as you appear about this whole thing I can't help but wonder if you are so confident in you long position. I'm quite certain that this will be the short of a lifetime but I appreciate you taking the time to try and convince me otherwise Mr. Pluvia, if that is your real name (since the post was anonymous).

pythagoruz said...

To the second Anonymous commenter,

You are correct, I did the post late last night and confused their process with the ENER thin film process. I just heard a presentation by Stanford Ovshinsky, the founder of ENER, and they deposit amorphous Silicon onto sheet metal.

I am familiar with the sputtering process and it appears that FSLR sputters CdTe. That usually involves ionizing a heavy noble gas like Argon then using a DC or RF electric field to "sputter" the material off a target source onto the substrate where you want to deposit material.

It is a pretty standard thing to do, thanks for bringing this error to my attention. I have corrected this in the post.

tooquiet said...

Give 'em hell Pyth!

I agree it's a great short, now that we will be heading into a recession energy demand will slow.

Anonymous said...

FSLR UP $14 TODAY !!!

Do you still think FSLR short is a good idea?

pythagoruz said...

The higher it goes the better short it will be. Look, my analysis was not based on any short term indications other than that the stock reached its previous high. Of course Wall Street is going to keep this bubble going so long as there are suckers like you out there willing to pay $290/sh for a stock thats prob worth $29. FSLR will go the way of CROX and all the other bubble stocks that ever came along, in time.

Anonymous said...

"The higher it goes the better short it will be."

But won't you lose everything on those now almost worthless FSLR puts?

Anonymous said...

FSLR -- 20 pts higher than when you suggested to short it [DOH!]

Is FSLR starting to pheel like you have the shaq phone up your rectum?

http://gizmodo.com/gadgets/cellphones/shaq-shoe-phone-033894.php

pythagoruz said...

Not sure why I'm even gratifying you with a response but my puts are not worthless, you think I'd be dumb enough to buy front month? And I said i was bullish on solar, making money off JASO. You must have missed my first post on JASO about a year ago where I was buying it at $8 split adjusted (and the other 10 posts since.

Get a life little dude.

JJun said...

well said pythagoruz.
FLSR is turning out to be one freakishly huge bubble. Entry at $290 just because wall street claims a value if $380 is absolutely stupid. Wall Street's role is to SELL things to the greater fool.

I still cant grasp how FLSR will plummet if they dont show REAL tangible profits. Less than $1B sales for a >$20B company is just pathetic.

Everyone is just riding a wave of speculation. I'll sit on the side and watch the fun from there.

cheers,
Jae
www.oldschoolvalue.com

pythagoruz said...

And by the way, its only up $16.12 from where I mentioned it as a long term short. Thats only 5.9% pip squeak. Frankly I would rather see this joke of a stock go higher, the higher it goes the harder its going to fall.

I suggested shorting it for a short term trade when it was at $240 in January before it fell to $150. So even if I'm down a little here by starting a position early I'm still up a ton shorting that POS.

http://stockgeometry.blogspot.com/2008/01/first-solar-update.html

I'll post a daily or hourly chart if I make any short term predictions. FSLR is a stock that I wouldn't mind building a short position on over months for the long ride back to sub $100. But you'll disappear the next day it drops 5%....

Silly anonymous angry internet people... sigh.

Anonymous said...

FSLR $295 up another $8.5; forming technical breakout pattern along with all the other solar co's.

Interesting you missed the very obvious cup & handle formation all these solar co's are in, several breakouts occurred in the last 2 days... All the solar stocks will follow and break higher.

So far you've been dead wrong on this trade. Interesting you call me silly for making money and being right?

As the saying goes, fools and their money...

You will be crushed on this trade; Solar is in the first inning of a new bull market, and the squeeze producing the next leg up started today.

If you want to make money trading, you need to separate your ego from reality before the market separates you from your wallet.

Calling people who out-traded you silly, well.. that's just silly isn't it?

pythagoruz said...

You just keep saying the exact same thing over and over, rather than respond with the same thing I said last time I'll just "lol."

JJun said...

First Solar going DOWN DOWN. Market is beginning to realize their foolishness.

Anonymous said...

Cost of FSLR PV -- And Why FSLR will Continue Higher

CALCULATOR

http://rredc.nrel.gov/solar/codes_algs/PVWATTS/version1/

1. INSERT PEAK POWER PRICE -- Look for peak power price in your area, [usually 4.5-6 cents higher than stated utility rate] then increase the power price in the calculator by this amount; also, you should expect to add another 3-5cents [guesstimate] for carbon credit as soon as the democrats win the white house.

When you run the calculator using peak power prices and without carbon credit, the numbers show a system installed for $3.50/watt is cheaper than utility power [if you have 5+ avg solar hrs].

Keep in mind FSLR already proved they could install at $3.50/watt. In other words if you can buy/install FSLR panels today you're cheaper than utility power. Payback with peak power [for our avg solar hours] is 15ish yrs; 11ish years with carbon credit.

We've designed systems for hi-end flat roof residential homes; we have no problem finding enough non-shaded roof space for a 10kw thin film system, [although these are large homes on big lots]. Install costs do not exceed 1.25/watt, usually coming in at about 1.05/watt [.73 for inverter, the remainder for cabling framing etc].

Image payback with the $2.00/watt + California credit.... Or Nanosolar Panels priced at $1-1.50....

FSLR demand at current production costs will exceed supply for at least 10yrs, more like 20 as its much cheaper and faster to install a PV and or wind system in emerging markets than any other power plant.

Keep in mind, PV will be used to run the new generation of EV & PHEV [www.evworld.com]. For emerging countries the ability to install a fuel source for transportation and infrastructure is very attractive.

pythagoruz said...

Thanks for the comment, this is exactly the type of response I am hoping for when I do a post.

Maybe I have not been clear enough about this, but I am extremely bullish on solar energy. Not only do I see it as the future of power generation, its a rapidly growing REAL industry in its early stages. My favorite solar stocks are SPWR and JASO and I have done quite well with JASO.

On the price point you are correct and there will certainly be increased government incentives in coming years, especially if the liberals take the white house. The future is very bright for solar in the short and long term.

But what I'm saying is that FSLR has the most insane valuation I have ever seen based on the assumption they will be growing at the same pace they are growing at now for many many years. I think that assumption is flawed because of materials issues. They can make their cells cheap, the cheapest in production currently but they also make some of the least efficient cells on the market. Right now they can compete with Silicon based technologies because the price of Silicon shortages. The silicon shortage is not because Silicon is rare but because demand spiked in recent years. Silicon comes from sand and we know there is plenty of sand in the world. FSLR's cells are based on one of the rarest materials on the planet and another material which is extremely hazardous and banned in many places. Furthermore, CdTe is inherently less efficient than Si for making PV because of the band gap and absorption coeff.

There is a decent chance they get crushed by competition as their CdTe costs increase and Si costs decrease, in my opinion. Now they can R&D their way out of this problem with new materials but the stock is priced like there is absolutely no chance of them having any problems for 5-10 yrs.

I've been doing some further research into this matter and will do a follow up post on Sunday citing some research publications and the director of the National Center for Photovoltaics whom I spoke with yesterday. Please check back later this weekend.

Anonymous said...

"Silicon comes from sand and we know there is plenty of sand in the world."

Obviously you don't understand the difference between silicone and c-Si; do your homework.

http://en.wikipedia.org/wiki/Solar_cell#Bulk

Even if c-Si material prices drop to c-Si pre-spike levels, c-Si PV mfg fixed costs CANNOT drop low enough to compete with CdTe mfg costs.

Furthermore there's no new technology that will allow existing c-Si mfg plants to substantially reduce costs allowing them to compete with with CdTe;

This is what happens when you plagiarize someone else's poorly researched short report. It is clear from your writing you don't know anything about the PV industry, the associated materials and costs or the key metrics driving PV.

You need to research the rare materials and availability used in CdTe as there's plenty of materials available, they're just not being processed.

http://www.firstsolar.com/pdf/Brookhaven_Life_Cycle_Analysis.pdf

You repeatedly claim CdTe is not competitive because of the lower comparative efficiency vs c-Si. This is an amazing display of ignorance. I suggest you do more research in this area.

As mentioned in my last post demonstrating FSLR PV is currently cheaper than grid power, here's another tidbit:

If you installed FSLR pv today, sign a time of day agreement with your utility, you can produce power at peak prices [typically 2-3x higher than off peak prices] then draw power from the grid at night into a battery storage system. The net effect is a substantial price drop in your power costs and a much faster payback for your PV system, allowing payoff in several years. This demonstrates a FSLR system today that can be used to replace transportation fuel making demand for FSLR priced PV infinite until transport fuel is satisfied.

Why would people switch to EV powered cars? Try $.35-45 cents per gallon [ad zero emissions] using this off-peak system vs $3.50 for gasoline.

http://www.rockymtnpower.net/Navigation/Navigation4428.html
http://www.rockymtnpower.net/Regulatory_Rule_Schedule/Regulatory_Rule_Schedule2268.pdf

I hope you're enjoy this education grasshopper.

indigo-alien said...

I approved this last one, but this guy is rapidly wearing out his welcome.

This is not a Yahoo board.

pythagoruz said...

In response to the confused anonymous poster's comments:

"Obviously you don't understand the difference between silicone and c-Si; do your homework. "

Silicone is the stuff they put in breast implants, its a rubber like material dude. Silicon is an element that is extremely common on this planet. How on Earth did you get Silicone mixed up with Silicon? Oh yeah, they are one letter apart... lol, are you two years old?

"Measured by mass, silicon makes up 25.7% of the Earth's crust and is the second most abundant element on Earth, after oxygen. Silicon is usually found in the form of silicon dioxide (also known as silica), and silicate.

Silica occurs in minerals consisting of (practically) pure silicon dioxide in different crystalline forms. Sand, amethyst, agate, quartz, rock crystal, chalcedony, flint, jasper, and opal are some of the forms in which silicon dioxide appears. (They are known as "lithogenic", as opposed to "biogenic", silicas.)"

Yes, sand is Silicon Dioxide which can be converted to silicon when heated to 1900C with come carbon based materials to deal with the oxygen. Its then purified via various methods and converted single crystal via the Czochralski process but that will be way over your head so I'll stop there.

http://en.wikipedia.org/wiki/Silicon#Production
http://en.wikipedia.org/wiki/Czochralski_process

On the other hand Tellurium has an abundance in the earth's crust of " 1 to 5 parts per billion." Even though the stuff may be cheap enough to compete with Silicon now that will change as more competitors try and replicate FSLR's success and Silicon supply ramps back up.

"You repeatedly claim CdTe is not competitive because of the lower comparative efficiency"

I did not claim that it is not competitive, it obviously is and they are kicking everyone's ass. I'm saying that rosy picture that you and a bunch of dopes on Wall Street have painted will change and the stock will come crashing back down to reasonable levels when that occurs.

Since you say nothing about valuation you lead me to beleive that you know nothing about market dynamics and bubble mania on Wall Street. Sure the technology might not dissapear but this stock will get crushed. You will learn a hard lesson about how the stock market works with this one.

"draw power from the grid at night into a battery storage system"

Show me a battery that can do that and be cost effective. Where do you come up with this BS? If that were the case then we would all have batteries installed in our houses for that very purpose.

And then you want to turn this into a electric car plug? Focus dude, focus.

And to back up Indigo, don't bother responding with that disrespectful tone here again because you'll be wasting your time.

pythagoruz said...

One takeaway from the popularity of bashing me on this post is that FSLR investors really don't understand the magnitude of the bubble they are buying in to. Not a single comment has been made about the valuation of this company but they love to talk about the technology. The real issue here, that many seem to be missing is the insane market cap of this stock and where that valuation comes from.

I won't have time to do the follow up post I've been researching tonight but hopefully it will get done this week. I need to hear back on a few emails and finish reading a paper before I'll be ready to write it.

Anonymous said...

VALUATION ARGUMENT

There's an easy way to determine valuation vs growth, since hi growth companies ALWAY have a hi valuation. it called PEG. Usually PEG is learned in stock market 101, but apparently not in your neck of the hillybilly woods.

Since the beginning of time, hi growth co's have had hi valuations and continued much higher [e.g GOOG and about 3 bazillion names during '98-2000, and before that in '82, etc, etc]. PEG was designed as a measure to evaluate hi growth & valuation.

Now, lets look at FSLR valuation; so let me see, they currently have a monopoly on cheap PV production; nobody can compete for several years as that's the lead time to build a plant; product demand is increasing and arguably infinite at FSLR's price point; soooo what's the concern?

Tellurium supply? LOL -- good one. Tellurium is a byproduct of copper mining; the concentrated "slime" that contains Tellurium is typically thrown away rather than processed into Tellurium. When does that change? When you contact the copper mines and tell them you will finance their Tellurium processing plant. Oh yea -- FSLR already did that? So now, Tellurium shortages actually become a competitive edge for FSLR, because they bought a guaranteed supply... DOH!

Re: c-Si

"Its then purified via various methods and converted single crystal via the Czochralski process"

Glad to see you can use wikpi and cut past [but then I guess we already knew that since you plagiarized that entire ridiculous short report -- huh?]

Had you read a little farther you'd have found the Czochralski process is old school and considerably less efficient that other methods currently employed. But good to see you're no longer claiming c-Si can be made by melting your used miller light bottles.

As far as my disrespectful tone: You earn respect when you present quality research, not when you plagiarize a short report that's full of false information. Don't whine to me because your market position is kicking your ass, do better homework next time.

Regards,

Steve Pluvia

Anonymous said...

Now that your Hillbilly research acknowledges hi growth companies deserve hi valuations, your sole remaining argument is FSLR cannot continue to grow rapidly because they have no materials to do so. Specifically you prattle on about a so called shortage of tellurium.

DOH!! WRONG AGAIN:

http://www.resourceinvestor.com/pebble.asp?relid=41351

"The 1999 report is comprehensive. It lists in significant, but popularly accessible, detail the mines, the metals and the recovery processes for tellurium globally and annually. It states, unequivocally, and with mining engineering references, that “the majority of tellurium produced comes from the …anode slimes that accumulate during the electrolytic refining of copper....”

The report then lists 30 companies around the globe that mine or refine tellurium to produce one of three grades:

1.
Tellurium dioxides-sludges and precipitates of variable purity, around 35%;
2.
Commercial grade tellurium: 99.7% purity;
3.
High purity tellurium: 99.9 to 99.9999%.

The report’s author notes that, in 1999, because of [then] current low demand, several of the facilities listed no longer recovered tellurium. The author then points out, “If improving market conditions would warrant, these facilities could again recover tellurium with a minimum amount of effort.” "

pythagoruz said...

Who said I hadn't heard of PEG? You're the one that is still dodging the issue with insults which makes you look like even more of an ass. You said "PEG" but then you didn't use it in any way, silly kid.

I'm going to use yahoo numbers because you are not worth the time to actually do any calculations in a response. The PEG of other leading solar stocks like SPWR and JASO is about 1.0. The PEG of FSLR is about 2.5. So its out of whack on that basis by a wide margin. The market is giving this stock a massive premium that can't be explained by growth rate alone, not even close. Price to earnings growth rate (PEG) should be roughly constant because higher growth rate should mean higher price. In other words, a company might deserve a higher PE on the basis that its growing faster (although 150 is insane for any growth rate) but PEG does not scale with growth rate.

See you learn something everyday Mr. Pluvia! No wonder you keep returning to this blog day after day.

pythagoruz said...

I have almost completed a phD in electronic materials fabrication, who are you but some anonymous internet poster trying to trick people into making bad decisions? I have passed qualifying exams on solid state device manufacturing and sat through more classes on semiconductor processing techniques than you could count in your head. You keep making outrageous claims like you know something about the technology but the reality is I bet you don't even know how a photovoltaic works, let alone how the band gap and thin film absorption of CdTe limit the efficiency fundamentally.

Look, I provided some wikipedia articles so you and other readers can maybe learn a little something about the technology. I don't expect you to be an expert, and you obviously aren't. I'm not going to go quoting some advanced lecture on purification of metallurgical grade Si to electronics grade or write down fermi's golden rule so you can derive recombination rates here. The purpose is not to insult each other by talking about how much more we know about this or that, its to get some constructive dialog going so we may all learn from each other.

The only point I was trying to make is that Silicon is not rare or hazardous at all. Cd & Te are both rare and hazardous. The stock is priced like they will have no problems growing at 100%+ for 20 years. That just ain't the case. When FSLR pops its going to be one ugly implosion.

Just don't come here insulting me and making yourself look like an idiot. It doesn't do anybody any good.

Until you have something constructive to say I'm done approving your comments.

Anonymous said...

"The PEG of other leading solar stocks like SPWR and JASO is about 1.0. The PEG of FSLR is about 2.5."

HUH?

So... You're comparing a c-Si PEG with FSLR's CdTe PEG...???

Despite the fact FSLR has:

1. A monopoly on a their low cost product while JASO and SPWR have multiple competitors and no way of reducing costs to a point they can price-compete with FSLR;

2. FSLR production costs are less than 1/2 that of SPWR & JASO

3. FSLR profit margins are 4x higher than JASO & SPWR

4. SPWR & JASO margins will get squeezed to almost nothing as lower cost thin film enters the market;

5. FSLR costs now make it competitive with grid power making demand at their cost point infinite as transportation fuel switches to electricity [plug in hybrids and EV's]

Hmmm.. So, hillbilly boy, you really think that's a good comparison of PEGs?

FSLR at $305 today puts your "educated" opinion under water $35-45 bucks...

Cheers,

Steve Pluvia

pythagoruz said...

I got stopped out at the open since FSLR broke $300, I also don't want to gamble on earnings (4/30). The chart looks like FSLR is headed to $330-$340 on this move so I'll step aside for now.

But I will be back into puts after April 30th! And to Steve Pluvia who seems to think I am loosing my ass on this stock I'm still up substantially due to the profits made back in January on puts despite this loss.

pythagoruz said...

"FSLR at $305 today puts your "educated" opinion under water $35-45 bucks..."

Well its back below $280 now, lol.

pythagoruz said...

Nice call Steve!

FSLR dropped almost $30 today after they released earnings yesterday. I did well on some puts, hope you got stopped out or were hedged.

http://stockcharts.com/h-sc/ui?s=fslr&p=D&yr=0&mn=6&dy=0&id=p71475662083

Anonymous said...

From other sources I've read, First Solar has a recycling program for their solar panels, which also last for 20-25 years (under their warranty), so the environmental effect is nil. Your point about cadmium exposure is true for workers directly involved in the manufacturing process, but not for the consumer.

In addition, you failed to address the much greater environmental degradation caused by the processes used by polysilicon panel manufacturers, which has been a much bigger and REAL problem than the hypothetical and nonexistent problem of cadmium and tellurium pollution due to first solar's cells.

pythagoruz said...

Steve is that you? Your return would be both surprising and welcome. How come I get no props for making such a great call on the FSLR bubble?

In response to your question, my views on this matter have almost completely changed. I no longer see the Cd in CdS/CdTe as an environmental concern and I no long see the "rarity" of Tellurium as an issue. I spoke with some people in industry and attended some talks at MRS (materials research society) last Spring that caused me to re-evaluate my view. Further, I'm now doing research on CdSe/CdTe materials currently.

I'm not so bearish on FSLR now that my target was reached and I certainly don't think they will go bankrupt anytime soon. However, their margins are going to get squeezed here by lower silicon costs for their competitors and an oversupply of PV. Once nanosolar ramps up production they could potentially bankrupt FSLR by selling a higher efficiency, lower priced product. I expect that the eventual downfall of FSLR, if ever, will come from nanosolar.

I should really do a follow up post to this as my opinions have changed so dramatically.

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Why... , thank you very much.

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